The toxicity of pay for performance

Qual Manag Health Care. Fall 1995;4(1):27-33. doi: 10.1097/00019514-199504010-00003.


Despite their superficial logic, systems of merit pay or pay for performance have features that are toxic to systemic improvement. Contingent rewards doled out by supervisors cause decreased focus on customer needs, loss of accurate information about defects and improvement opportunities, avoidance of stretch goals, and decreased innovation. They may also erode teamwork. Pay for performance may mark a naive understanding of the complexity of human motivation.

MeSH terms

  • Creativity
  • Employee Incentive Plans / economics*
  • Employee Incentive Plans / standards
  • Evaluation Studies as Topic
  • Humans
  • Interpersonal Relations
  • Motivation*
  • Organizational Innovation
  • Organizational Objectives
  • Psychology, Industrial
  • Reward
  • Salaries and Fringe Benefits*
  • Social Justice
  • United States